Bee Pee Jay Finance Ltd. Vs CIT and Anr (Calcutta High Court)- By virtue of Section 11 5JA a legal fiction has been created by which if total income is found to be less than 30% of the book profit, the total income should be deemed to be 30% of the profit and in such a case, if charge ability of interest under Sections 234B and 234C are held applicable only in view of sub-Section (4) of Section 11 5JA, it would amount to adding another legal fiction to an existing legal fiction of Section 11 5JA( 1). According to Mr. Sen in case of a legal fiction, which has to be interpreted for giving its full logical coverage, another legal fiction cannot be added to the same and for the aforesaid proposition.

This appeal under Section 260A of the Income-tax (“Act”), 1961 is at the instance of an assessee and is directed against an order dated 16th July, 2003, passed by the Income-tax Appellate Tribunal, “A” Bench, Kolkata, in ITA No. 2567/Kol of 2002 for the Assessment Year 1999-2000.

A Division Bench of this Court while admitting this appeal on January 12, 2004 formulated the following substantial question of law:

“Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee was liable to pay interest u/s. 234B and 234C of the Income Tax Act on the tax payable on the book profit computed u/s 1 15J of the Act notwithstanding the fact that it was a deemed profit.”

It appears that the aforesaid question has recently been answered by a Three-Judge-Bench of the Supreme Court in the case of Joint Commissioner of Income-tax vs. Rolta India Ltd., reported in [2011] 330 ITR 470 (SC) in the affirmative and against the assessee and as such, we propose to dispose of this appeal by following the said decision.

Mr. Sen, the learned Advocate appearing on behalf of the appellant, however, submitted before us that by virtue of Section 11 5JA a legal fiction has been created by which if total income is found to be less than 30% of the book profit, the total income should be deemed to be 30% of the profit and in such a case, if chargeability of interest under Sections 234B and 234C are held applicable only in view of sub-Section (4) of Section 11 5JA, it would amount to adding another legal fiction to an existing legal fiction of Section 11 5JA( 1). According to Mr. Sen in case of a legal fiction, which has to be interpreted for giving its full logical coverage, another legal fiction cannot be added to the same and for the aforesaid proposition, he relied upon the decision of the Supreme Court in the case of Commissioner of Income-tax (Central), Calcutta Vs. Moon Mills Ltd., reported in 59 ITR 574 (SC).

According to Mr. Sen in deciding the matter in the case of Rolta India Ltd. (Supra), the Supreme Court did not take into consideration the aforesaid aspect reflected from its own decision in the case of Moon Mills Ltd. (Supra) and the case of CIT vs. Kwality Biscuits Ltd., reported in (2006) 284 ITR 434 (SC) and thus, the decision of the Supreme Court in the case of Rolta India Ltd. (Supra) does not lay down the correct proposition of law and if those two decisions were taken note of, the ultimate conclusion would have been otherwise.

After hearing Mr. Sen, learned Advocate appearing on behalf of the appellant and after going through the decision in case of Rolta India Ltd. (Supra), we are unable to accept the contention of Mr. Sen that a proposition of law laid down in a decision of a Supreme Court loses its value as a precedent simply because a particular point was not considered in the said decision while arriving at the decision in question.

As in the case of Rolta India Ltd. (Supra), the exact point involved therein as in this appeal has been decided against the assessee, there is no scope of any argument that if the point raised by Mr. Sen was considered in the case of Rolta India Ltd, the decision might have been different.

It is now a settled law that decision given by the Supreme Court on a pure question of law is binding upon all the Courts in India and the said decision cannot be avoided on the ground that the Supreme Court in laying down the proposition of law did not consider a vital aspect of the matter.

In this connection, we may appropriately refer to the following observation of a Three-Judge-Bench of Supreme Court in the case of Director of Settlements, A. P. and others v. M. R. Apparao and another, reported in AIR 2002 SC 1598, dealing with the similar nature of submission as made by Mr. Sen:

“The decision in a judgement of the Supreme Court cannot be assailed on the ground that certain aspects were not considered or the relevant provisions were not brought to the notice of the Court (See AIR 1970 SC 1002 and AIR 1973 SC 794). When Supreme Court decides a principle it would be the duty of the High Court or a subordinate Court to follow the decision of the Supreme Court.”

We, thus, find no substance in the aforesaid contention of Mr. Sen.

We, thus, dismiss this appeal by affirming the order passed by the Tribunal and answering the question of law formulated by the Division Bench in

the affirmative and against the assessee.

In the facts and circumstances, there will be, however, no order as to costs.